Constitutional amendment for a balanced budget?

Permabear · 04-10-2010 1:45pm #1

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OhNoYouDidn't · 04-10-2010 1:56pm

Anglo might be Fiscal Idiocy, on that we 100% agree, but FF are the mandated government of this country and are entitled to govern. Badly admittedly, and I think they will get spanked very hard as a result, but the idea of a constitutional ban on running a surplus or deficit is too restricting for me. Debt itself is not the problem, and if raised to build public infrastructure is very healthy. Its that we are raising it to sink into a hole with no return.

I'm surprised you are advocating more law DF....

ei.sdraob · 04-10-2010 2:00pm

We already are meant to be operating under very low deficits (~3%) since we joined the euro (no slap on the wrist for going to 33% :rolleyes: )
which is not too far from what @donegalfella is proposing.

Infrastructure projects could be funded separately as some already are via European investment bank

You seem to think that @donegalfella is anti-legislation for some reason,
this measure he is proposing is designed to limit the power of the government (in the case of Ireland ensure some sort of responsibility when mortgaging the future of its people!) and dare i said fits perfectly into the smaller government aims...

@donegalfella whats there to stop the government then getting involved in NAMA like public/private farce structures, like they do now in order to sidestep those "pesky" EU rules

Permabear · 04-10-2010 2:04pm

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Rabble Rabble · 04-10-2010 2:05pm

California, here we come.

Right back where we started from.

Bottle_of_Smoke · 04-10-2010 2:09pm

I'd be for a constitutional requirement that limits debt to a percentage of GDP.

Permabear · 04-10-2010 2:11pm

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OhNoYouDidn't · 04-10-2010 2:12pm

I don't disagree in principal, but I don't think banning suprluses or deficits is the way to go either. It would be impossible to manage as well. If they had a surplus would we all get a rebate in December?

I don't think the M50 was 'wasteful'.

Fair enough, that I accept. But the core point is that the Government of the day have to have the right to govern. If that involves a surplus or a deficit, well so be it.

We agree that Anglo is wrong, but thats FF's right to do and the electorate will decide if they were right or wrong rather than the courts.

Permabear · 04-10-2010 2:13pm

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Wolfe Tone · 04-10-2010 2:15pm

There would have to be provision for emergencies would there not? I mean if something big came up we would need the cash.

Should the government impose restrictions on citizens borrowing too?

Justin Collery · 04-10-2010 2:16pm

+1

Not only would I vote for this, it would be in my top 5 wants. If I set up a party in the morning this would one of my pillars. We need this desperately.

metrovelvet · 04-10-2010 2:16pm

Can't Bono negotiate a write off like he did for Africa?

ei.sdraob · 04-10-2010 2:20pm

We need "checks and balances" and "restraints" on the government from doing stupid things that could potentially hurt the people of this country, I know it might be too late for the mistakes already made, but FF keep digging a deeper hole for us.

anyways

tho our reality is closer to this quote

Permabear · 04-10-2010 2:21pm

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ei.sdraob · 04-10-2010 2:23pm

Put it away for a rainy day says Keynes

you know so we could actually do a proper stimulus if the outside world decides to have a financial fart again.

Justin Collery · 04-10-2010 2:26pm

The beauty of the system. In the knowledge that borrowing is impossible fiscal decisions become all the more conservative. I do believe that capital expenditure should be separate however, perhaps allowing 10% of tax take to be borrowed to fund capital projects.

OhNoYouDidn't · 04-10-2010 2:28pm

But you are arguing they should not be allowed to that....

Permabear · 04-10-2010 2:37pm

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Permabear · 04-10-2010 2:44pm

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ei.sdraob · 04-10-2010 2:45pm

Isnt a referendum a way of people deciding on an important issue that affect the constitution?
there's nothing wrong with asking people to vote on a matter like this its quite democratic we had referenda for much less important issues.

If the government has unrestrained power, then how are we different from medieval serfs and their lords?

Lockstep · 04-10-2010 3:01pm

Creating general parameters for the budget to follow isn't a bad idea.

The EU system is a good example: aiming for a 3% deficit, 60% debt to GDP and allows for these to be deviated from, in extenuating circumstances

Permabear · 04-10-2010 3:27pm

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OhNoYouDidn't · 04-10-2010 3:42pm

And to me that is the inherent corruption with capitalism. FF were too busy handing out contratcts to mates than getting proper value.

Not at all, I have argued against NAMA / Anglo to tedium. I'm saying that the Governement should be anwserable to you and me at the end of their term and the courts should by and large stay out of economic policy.

I believe you are right as it happens, but still don't think the courts should have a veto over fiscal planning.

OhNoYouDidn't · 04-10-2010 3:43pm

Which the EU will overrule as per Lisbon....

Wolfe Tone · 04-10-2010 3:52pm

TBH I think that the courts actually have too much power in our system. So much is subject to their interpretation.

acer1000 · 04-10-2010 4:11pm

LOL

Maybe, we could convince him to setup a LiveAid for Ireland in Africa. Hell, they surely could spare some change for us after what our Bono did for them, they can't be that ungrateful, surely?. He'd hope into his leather pants and strut his stuff for us, in a flash.. He's only waiting to be asked, I'd say.

If Bob Geldof hears about this he'll be dying to get in on the act, too.

Permabear · 04-10-2010 4:21pm

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OhNoYouDidn't · 04-10-2010 4:34pm

I'm sure you aren't, but there is no other type.

They lose their seat. Its the democratic way. Are you suggesting they would be more answerable to a court they appoint?

I have clearly stated I do not. I just don't want the courts involved in economic matters

Of course it does, thats the core tenent of it.

Permabear · 04-10-2010 4:50pm

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OhNoYouDidn't · 04-10-2010 5:00pm

Well I'm sure any day now a variant will come along where the nexus between politicians and business isn't corrupt and murky. But to date...

I agree a mechanism would be lovely, but I don't think the courts are it. Especially political appointees staffing those courts.

Not arsed finding the actual provision, but its there. As is the primacy of EU citizenship over Irish.

Put another way, do you think the EU would allow us put a clause in our constitution over-ruling a clause in theirs, especially economic in nature? Judging by the weekend papers we will struggle to keep tax sovereignity, how do you think the idea of an Bunreacht over-ruling the ECB on fiscal matters would sit?

Interesting debate, but a non runner in real politick terms.

ei.sdraob · 04-10-2010 5:00pm

corruption and bribery are traits of any systems that are not transparent and give too much power to too few people

if anything they are more prevalent under socialist systems who make an art form out of these

Eliot Rosewater · 04-10-2010 5:03pm

I'd be in full support of any restraints like this. The big advantage would be the way it would force the population to pay for its services. This would make it a lot harder for populist politicians to promise the world and much more on the back of unsustainable borrowing.

But I don't think I would have any problem with a government underspending. This country has suffered from the lack of a rainy day fund. If you were to allow underspending, and forbid borrowing, governments would probably be forced to save money, hence making the 3% of GDP rule a little redundant.

Or perhaps I'm being idealistic!

You're blaming capitalism for something a government is doing?

Permabear · 04-10-2010 5:08pm

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Justin Collery · 04-10-2010 5:23pm

Quite correct. In fact the German states already are implementing such a rule which limits deficits and outlaws them completely by 2020

Lockstep · 04-10-2010 5:46pm

The requirements of the S&G Pact were included in Lisbon and the EU is given additional powers to enforce them.

Permabear · 04-10-2010 6:31pm

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Permabear · 04-10-2010 6:37pm

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johnnyskeleton · 04-10-2010 6:43pm

Four practical problems -

1) the majority of economists still follow keynesian thinking if only in theory. So a balanced budget is not desireable and instead there should be a range rather than an absolute balance;

2) how exactly do you enforce it when they don't balance the budget? Other rights are enforced by the courts, but this is too unweildy to ever be used in the courts;

3) what about genuine emergencies? Should these allow for a deficit e.g. WWIII or massive tsunami;

4) with the best will in the world governments can only budget, they cannot predict the next year exactly.

I can see the merit in such limitations, but sure the EU already have us under such limitations and, as already pointed out, there is no sanction for doing wrong. So I fail to see how the constitution would keep them any more honest.

View · 04-10-2010 6:59pm

In Germany, they introduced such a provision last year. It is being phased in over a number of years. It applies in full to the Bund from 2016, the Laender from 2020.

Not that we are likely to pay any attention to what the most important economy in the Eurozone does.

View · 04-10-2010 7:02pm

This isn't quite true. There is an "Excessive Debt Procedure" which the Commission does initiate in these cases. Right now it has initiated it against 26 of the 27 member states. Unfortunately, the procedure is a bit weak since it assumes that the member states are intelligent enough not to want to destroy their economies.

The procedure will be changed I suspect...

Justin Collery · 04-10-2010 7:10pm

Given they will be running the place by Valentines day perhaps we should pay attention. Remonds of the old official language of Europe joke - http://www.dublin.ie/forums/showthread.php?9677-English-to-become-the-official-european-language&p=430458&viewfull=1#post430458

Lockstep · 04-10-2010 7:14pm

The EU's powers in this regard have only recently come into being.

The EU hasn't shied away from threatening Greece into becoming more sustainable (kickstarting widespread protests and so on)

Eliot Rosewater · 04-10-2010 7:58pm

That's a fair point. I don't think any politician would be keen to save the State's money: they'd get a lot more votes by cutting tax instead of putting money into a long term saving scheme.

I think the provision would stipulate that any "money bill" be free from borrowing requirements, otherwise it cannot be passed.

The particular article could be "ignored" in a state of emergency.

Well then the government will have to err on the side of fiscal conservatism/stability.

Permabear · 04-10-2010 8:12pm

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ei.sdraob · 04-10-2010 9:16pm

as already mentioned Keynes said many times that for his policies to work a nation needs to save the surplus during the good times

its not just all spend spend spend ...

Justin Collery · 04-10-2010 10:10pm

Of course one possible outcome of this crises is full fiscal union. Irish debts become European debts. In that case the European Union can borrow, but not the Irish government. I think it's likely thats what we'll end up with, either that or no Euro at all.

phantom_lord · 05-10-2010 2:13am

How would this work though? What exactly would the government do this year if it had no option to borrow? Just sack the whole civil service or something?

The government having a balanced budget would great, but I don't think this is a way to achieve it.

imme · 05-10-2010 4:30am

-Yes the Anglo debacle is incredible, a mountain of incredibility. One day the true story will be written and known to all and then we'll say never again, but it's guarenteed to happen again, just as night follows day.

-Who is 'throwing' 20Billion at a grossly overstaffed

and inefficent

public sector.

-We elect the 'gombeen' people you talk about in the Dail. They're the people who are among those who are put forward for the electorate to choose from.
Do scientists/economists (please don't mention those geniuses:D) /engineers /specialists emerge as candidates in significant numbers.

The idea is interesting, BUT will never be seen as a referendum before the Irish People.

Irish governments sought to balance the budget since the foundation of the State, as was the received political wisdom at the time, a shilling off the Old Age Pension, anyone?

Then in the '60's things changed. Things change. Sometimes it is desirable to seek to balance the budget at other times it's not desirable.

It would straitjacket any government too much, I think.

imme · 05-10-2010 4:38am

double post

Lockstep · 05-10-2010 9:13am

Yes but the EU lacked effective enforcement ability up until Lisbon was passed. Greek problems had been going on for years (and if I remember rightly, involved misleading the rest of the Eurozone to make their books appear better than they were in reality)
As it stands, the EU is showing a willingness to bring in harsher measures (Greece) as well as allowing the possibility of the IMF coming in.

Permabear · 05-10-2010 10:57am

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Constitutional amendment for a balanced budget?

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